BC
Brunswick Corporation
$66.11
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 101.7% above fair value
You pay
$66.11
Bear
$23.84
Fair
$32.78
Bull
$41.72
Bear
$23.84
-63.9%
$5.96 × 4x
Fair
$32.78
-50.4%
$5.96 × 6x
Bull
$41.72
-36.9%
$5.96 × 7x
Adjust Assumptions
5.5x
5.96$
Key Value Driver
Through-cycle normalized EPS ($5.96)
Implied Market Multiple
11.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (31 analysts)
$81.40
Divergence from AlphaVal
60%
Summary
Using 7-year normalized EPS of $5.96 at a 6x cycle multiple, the base-case value is $32.78 per share. P/TBV cross-check: 47.8x.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 47.8x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $81.40 (from 31 analysts). Our estimate is 60% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing